Vedder Price is pleased to announce that it advised ITE Management as the anchor equity investor in Air Lease Corporation’s Thunderbolt II aircraft asset backed securitization (ABS). The Thunderbolt II structure is secured by a portfolio of 18 narrowbody and widebody jet aircraft on lease to 16 lessees based in 15 countries.

The deal includes a traditional capital markets offering of two series of fixed rate notes and equity in the form of Aircraft Portfolio Shares (APS), comprised of 90% Global Aircraft Portfolio Shares (GAPS) and the 10% Certificated Aircraft Portfolio Shares (CAPS), purchased by an investment vehicle controlled by ITE Management. Air Lease Corporation remains as servicers and portfolio manager for the aircraft. This innovative equity structure is intended to create a broadly distributed asset that is more tradeable than the traditional E notes in an aircraft asset backed securitization.

Global Transportation Finance Shareholders Jeffrey Veber and Michael Draz, Capital Markets Shareholder Kevin MacLeod and Corporate Tax Shareholder Matthew Larvick led the team for Vedder Price.

Vedder Price is pleased to announce that Anand V. Ramana has joined the firm as a Shareholder in its Litigation group in the Washington, DC office.

Mr. Ramana is an accomplished first-chair trial and appellate lawyer. He prosecutes and defends lawsuits in state and federal courts around the nation, with a particular focus in the DC and Virginia tribunals. A large portion of his practice is handling litigation between government contractors. He is a leading authority on teaming agreement and subcontract issues. Mr. Ramana has litigated contract award disputes before the Government Accountability Office and federal and state agencies, and has prosecuted and defended federal contract claims before boards of contract appeals.

“I’m thrilled to join Vedder Price and provide additional depth in its local, national, and international commercial litigation practice,” said Mr. Ramana. “I look forward to providing our clients with the best-in-class service for which Vedder is known, and to help further solidify our firm as a leading authority in both business litigation and government contracts.”

Prior to joining Vedder Price, Mr. Ramana was a Partner at McGuire Woods. Over the course of his career, he has handled financial services litigation, real property and construction disputes, UCC matters, insurance coverage disputes and consumer protection matters. He also represents foreign companies, governments and individuals in litigation in American courts. He is well versed in the peculiarities of foreign parties, witnesses and evidence and has substantial experience in helping his foreign clients understand and navigate the American legal system.

“We are very excited that Anand has joined us in DC,” said Randall Lending, Chair of Vedder Price’s Litigation practice area. “He brings a solid trial background, a strong commitment to client service and a very active litigation profile that complements our practice. Anand expands and enhances our existing commercial litigation capabilities in our DC office.”

Mr. Ramana earned his J.D. and M.A. from The George Washington University and his B.A. from the University of Michigan.

Vedder Price is pleased to announce that Global Transportation Finance Shareholder Mark J. Ditto was recently included on the shortlist for Euromoney Legal Media Group’s inaugural Americas Rising Star Awards in the “Best in Aviation” category.

The Awards celebrate rising star attorneys under the age of 40 across a number of practice areas based on their work over the previous 12 months. The awards will be presented at a ceremony in New York in September.

Mr. Ditto represents operating lessors, commercial banks, finance companies, private equity firms and hedge funds in complex commercial aircraft transactions, including securitizations and warehouse financings, Rule 144A and Regulation S capital markets offerings, including those involving syndicated equity, joint ventures, cross-border operating and finance leases, distressed-debt trades and workouts and the establishment of offshore leasing platforms.

Euromoney Legal Media Group, an international publications and industry information corporation, provides authoritative coverage of the global legal market and is a preeminent resource for corporate heads and in-house counsel worldwide.

Getting the Deal Through has published "Aviation Finance & Leasing 2018," which includes "Aircraft operating leases – New York law or English law?", an article co-authored by Shareholder Thomas A. Zimmer and Partner Neil Poland, and a jurisdictional chapter on U.S. law also authored by Mr. Zimmer.

To read the articles in full, please download the attachments below.

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through – Aviation Finance & Leasing 2018 (Published: July 2018). For further information please visit www.gettingthedealthrough.com.

On June 6, 2018, the Office of the General Counsel of the National Labor Relations Board (the “NLRB” or the “Board”) published its most recent memo concerning employer handbook policies. The memo’s guidance reflects a stark shift by the NLRB away from its largely employee-friendly stance on employer policies. 

Why the Change?
In March 2015, the Office of the General Counsel issued guidance on the types of handbook employment policies the General Counsel would continue to consider an unlawful infringement on employee rights protected by the National Labor Relations Act (“NLRA”). During the Obama administration, various Board decisions found that many facially neutral employee handbook rules were unlawful because they could be “reasonably construed” by employees to infringe on their rights to engage in protected concerted activity. The General Counsel quietly withdrew guidance issued by his predecessor on December 1, 2017. On December 14, 2017, the NLRB laid out a new approach to these cases in The Boeing Company, 365 NLRB No. 154.

In Boeing, the Board analyzed previous decisions regarding the legality of employer handbook rules and held that its previously articulated “reasonably construe” standard created “rampant confusion” and prevented the Board from giving “meaningful consideration to the real-world complexities associated with employment policies.” Emphasizing the need for “common sense,” the Board held that going forward, employer rules would be assessed as falling into one of three categories: first, generally lawful rules that, if reasonably interpreted, do not interfere with the exercise of NLRA rights; second, rules that warrant “individualized scrutiny” as to whether any adverse impact on employee rights is outweighed by legitimate justifications; and third, rules that are generally unlawful because they limit conduct protected by the NLRA.

What Has Changed?
The June 6, 2018 memo lays out the General Counsel’s interpretation of Boeing. The memo is not binding as a case decision would be, but it provides insight into how the new General Counsel will exercise his authority when making decisions to prosecute and dismiss charges on handbook policies without a hearing. Until the NLRB decides more cases, the memo is the most detailed guidance available on where the NLRB’s new direction will take that law.

The memo sets forth the following:

• rules in the first category that generally are lawful include those requiring civility and authorization to speak on behalf of the employer and preclude the disclosure of confidential customer information;
• rules in the second category that warrant “individualized scrutiny” include, for example, those regulating off-duty conduct, confidentiality and conflicts of interest; and
• rules in the third category that remain unlawful are those against joining outside organizations or that require employees to keep the terms and conditions of their work confidential.

What Should Employers Do? 
Employers are encouraged to review their handbook policies to see where they might be able to articulate stronger expectations regarding, in particular, rules which may fall into category one, and where they may need to revise their policies regarding confidential and/or proprietary information (which could fall into any of the articulated three categories). In doing so, employers will need to consider the specifics of the memo’s guidance, new decisions on this topic coming from the Board almost every month, as well as the myriad of other recent developments impacting employer policies, including the General Data Protection Regulation (GDPR), publicity surrounding the #MeToo movement and new state laws legalizing the off-duty use of marijuana.

If you have any questions concerning the NLRB memo and its impact on your company’s policies, please contact Elizabeth N. Hall at +1 (312) 609-7795, Kenneth F. Sparks at +1 (312) 609-7877, Caralyn M. Olie at +1 (312) 609-7796 or the Vedder Price attorney with whom you have previously worked.

We encourage you to visit us at vedderprice.com/workplace-counseling-and-policies to learn more about how Vedder Price partners with our clients to provide strategic and practical advice and options in dealing with difficult labor and employment issues. Our Labor & Employment attorneys regularly review employee handbooks, policies and procedures and help develop new policies to comply with the increasingly complex web of federal, state and local employment laws.

Click below to download a PDF of this article.

On June 21, 2018, the United States Supreme Court resolved a circuit split on the question of whether administrative law judges (“ALJs”) of the Securities and Exchange Commission (the “SEC” or the “Commission”) qualify as “officers” of the United States subject to the Appointments Clause of the United States Constitution. In Lucia v. SEC, 585 U.S. ___ (2018), the Court held that the Commission’s ALJs are “inferior officers” and thus subject to the Appointments Clause. Whereas SEC ALJs were previously considered by the Commission to be “employees” and were hired by Commission staff, this ruling means that ALJs must be appointed in the future by the President, “Courts of Law,” or “Heads of Departments.”

Background

The circuit split arose from competing Court of Appeals decisions in the D.C. Circuit and the Tenth Circuit. After an SEC ALJ rendered an unfavorable decision against Raymond Lucia, he appealed within the Commission (and later to the D.C. Circuit) arguing that the administrative proceeding was invalid because the presiding ALJ had not been constitutionally appointed and thus lacked the constitutional authority to do his job. Lucia argued that the Commission’s ALJs are “Officers of the United States” who are therefore subject to the Appointments Clause and thus must be appointed by the President, “Courts of Law,” or “Heads of Departments.” The presiding ALJ, however, had been appointed by Commission staff members. The Commission and the D.C. Circuit¹ rejected Lucia’s argument. They reasoned that the Commission’s ALJs were “mere employees” with responsibilities that fell outside of the sphere of the Appointments Clause.

Meanwhile, the Tenth Circuit in Bandimere v. SEC² reached the opposite conclusion. David Bandimere challenged the authority of the ALJ who presided over the Commission’s enforcement action against him, and the Tenth Circuit held that, based on the Supreme Court’s 1991 ruling in Freytag v. Commissioner of Internal Revenue,³  the Commission ALJ was an inferior officer. Because the ALJ was not constitutionally appointed, he held his office in violation of the Appointments Clause.

Ruling

The Supreme Court reversed the D.C. Circuit’s ruling and instead sided with the Tenth Circuit in holding that SEC ALJs are subject to the Appointments Clause. Justice Kagan, writing for the majority, reasoned that three Supreme Court cases essentially decided the case before the Court. First, in the 1879 case United States v. Germaine,⁴ the Supreme Court made clear that in order to qualify as an “officer,” the individual must hold a “continuing” position established by law. Second, in Buckley v. Valeo,⁵ the Supreme Court held that members of a federal commission were officers because they “exercise[ed] significant authority pursuant to the laws of the United States.”⁶ Third, the Court focused on the 1991 case Freytag v. Commissioner, in which the Supreme Court applied the “significant authority” test in determining that Special Trial Judges in the United States Tax Court were “officers” for purposes of the Appointments Clause.

The Court found Freytag’s Special Trial Judges to be “near carbon-copies of the Commission’s ALJs”⁷ and stated that “Freytag says everything necessary to decide this case.”⁸ The Commission’s ALJs, Justice Kagan wrote, hold a continuing office established by law; exercise significant discretion in holding adversarial hearings, and use nearly all of the same tools utilized by federal judges; and issue decisions that contain factual and legal findings, and appropriate remedies. The Court noted that while the Tax Court’s Special Trial Judges must have their decisions adopted by a regular judge, an ALJ’s decision becomes final when the Commission declines review. “That last-word capacity makes this an a fortiori case: If the Tax Court’s STJs are officers, as Freytag held, then the Commission’s ALJs must be too.”⁹

Although addressed during oral argument, the majority opinion declined to rule on whether restrictions against removing the Commission’s ALJs are constitutional. In his partial concurrence and partial dissent, Justice Stephen Breyer addressed the issue, writing, “This would risk transforming administrative law judges from independent adjudicators into dependent decisionmakers, serving at the pleasure of the Commission.”¹⁰ Holding that the ALJs are officers makes the Commission more accountable for their rulings but at the same time may make the ALJs less independent. The constitutionality of the restrictions against removing ALJs may be the subject of a future Supreme Court case.

Finally, the Court addressed the issue of the proper remedy for Lucia, holding that he is entitled to a new hearing before a properly appointed official, and that the hearing may not be before the ALJ who previously heard the enforcement action.

Key Takeaways and Questions

SEC’s Prior Ratification of ALJs. In November 2017, the Commission abandoned its position that its ALJs were “employees,” and ratified the prior hiring of its ALJs in a manner it deemed consistent with the Appointments Clause. In Lucia, however, the Court held that the ALJ who previously presided over that matter could not preside over Lucia’s new hearing “even if he has by now received a constitutional appointment.” The Court did not rule on whether the Commission’s ratification of the prior hires was adequate. It remains to be seen whether the Commission will maintain its position that the November 2017 ratification of its ALJs complied with the Appointments Clause.

Pending SEC Administrative Proceedings. On June 21, 2018, in reaction to the ruling in Lucia, the Commission announced that it was staying “any pending administrative proceeding initiated by an order instituting proceedings that commenced the proceeding and set it for hearing before an [ALJ], including any such proceeding currently pending before the Commission.” The stay will last for 30 days.

Previously Decided SEC Administrative Proceedings. The ruling in Lucia provides for relief to respondents who have made a “timely challenge” to the constitutionality of the Commission’s ALJs. Lucia contested the validity of the ALJ’s appointment during his appeal to the Commission and continued to assert that claim in the Court of Appeals and the Supreme Court. It appears, then, that respondents who did not previously make such a challenge may now be time-barred from doing so and ineligible for relief.

ALJs in Other Agencies. While the Court’s opinion was limited to the Commission’s ALJs, it raises constitutional questions about as many as 150 ALJs in many other federal agencies such as the CFPB and FDIC.

If you have any questions regarding the issues in this article, please contact Joshua Nichols at +1 (312) 609 7724, Ashley B. Huddleston at +1 (212) 407 7793, Michael J. Quinn at +1 (424) 204 7734, Junaid A. Zubairi at +1 (312) 609 7720 or any Vedder Price attorney with whom you have worked. 

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¹ 832 F.3d 277 (D.C. Cir. 2016).
² 844 F.3d 1168 (10th Cir. 2016).
³ 501 U.S. 868 (1991).
⁴ 99 U.S. 508 (1879).
⁵ 424 U.S. 1 (1976) (per curiam).
⁶ 424 U.S. at 126.
⁷ 585 U.S. ___, at 6 (2018).
⁸ 585 U.S. ___, at 8 (2018).
⁹ 585 U.S. ___, at 10 (2018).
¹⁰ 585 U.S. ___, at 6 (2018) (J. Breyer) (emphasis in original).

On Tuesday, August 21, 2018 Labor & Employment Shareholder Sadina Montani will present a live webinar, hosted by Lorman, at 1:00 p.m. EST. This webinar will provide employers with the ins and outs of the Family and Medical Leave Act (FMLA) and what you can do to minimize potential leave abuse.
 
Ms. Montani will discuss how employers, human resource professionals, office managers and administrators can implement appropriate FMLA procedures, identify warning signs of potential abuse by its employees and take the steps necessary to root out and eliminate those instances of abuse.
 
To learn more about this webinar or register, please click here.

Labor & Employment attorney Cara J. Ottenweller will present at the Chicago EEO Seminar, hosted by the U.S. Equal Employment Opportunity Commission (EEOC) Training Institute on August 28, 2018.

The program will offer a look into the latest developments in EEO law and workplace best practices, including the top ten issues for employers to watch, workplace harassment, leave of absence issues, and compliance with the Americans with Disabilities Act (ADA) and Age Discrimination in Employment Act (ADEA)..

Ms. Ottenweller’s session will focus on employers’ obligations regarding the ADA’s requirements on granting leave as a reasonable accommodation. Ms. Ottenweller and her co-presenters Deborah Hamilton, Supervisory Trial Attorney at the Chicago District Office of the EEOC, and Catherine L. Seidelman, Trial Attorney for the Office of the Solicitor, Department of Labor, will provide their perspectives on the legal requirements for providing employees with such leave.

To learn more about this seminar, please click here.